For years, the pursuit of wealthy tax cheats has been a game most successfully played by the US government. But the Europeans appear to be ratcheting up their tax compliance efforts as well.
The German government has been investigating individuals it suspects of dodging taxes through hiding assets in the tax haven of Lichtentstein, and the resulting sweep has ensnared Germany's top postal official. German officials are working from a list of about 1,400 clients of Lichtenstein financial institution LGT Group. An informant--a former LGT employee--reportedly sold the information to Germany's intelligence service in 2006. The list includes at least 100 Americans.
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As part of an effort to uncover tax fraud, the US Justice Department in July issued a summons for Swiss banking giant UBS to turn over the names of US clients. It remains to be see just how much Switzerland, with its famous bank secrecy laws, will cooperate. In general, Washington has scrutinized offshore tax havens in recent years as it seeks to freeze terrorist financing in the wake of 9/11.
With an increasing number of people moving their money into tax havens like Andorra, Switzerland and the Cayman Islands, governments appear to be cracking down on tax compliance. In the case involving Lichtenstein and Germany, the Great Britain, France, Germany and Sweden are also reportedly involved in the investigation.
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The recent revenue-chasing efforts seem to provide a good opportunity to take a look back at some of the wealthiest tax cheats in recent years. In compiling a list, we scoured Forbes' annual compilations of the world's billionaires. To be included, an individual had to be convicted of tax evasion, or had to accept responsibility for the charges levied against him (as former Samsung Group Chairman Lee Kun-Hee did in April when he was indicted on charges of tax evasion and breach of trust).
Not surprisingly, Americans dominate the list. There's Leona Helmsley, the "mistress of mean," who reportedly claimed that "only the little people pay taxes." Convicted of tax evasion in 1989, she remained a billionaire until her death in 2007.
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More recently, real estate magnate Igor Olenicoff pled guilty in December 2007 to filing a false tax return. Last month, UBS banker Bradley Birkenfeld admitted to helping Olenicoff hide assets worth $200 million in tax havens overseas.
And there's the infamous duo of fugitive commodities traders Marc Rich and Pincus Green, who were pardoned by President Bill Clinton in 2001. Rich and Green, who essentially invented spot-market trading in oil, aroused the scrutiny of the US Justice Department for their shady Middle Eastern trades in the 1970s.
By 1983, a canny federal prosecutor named Rudolph Giuliani indicted them on dozens of charges, including tax evasion. They sought refuge in Switzerland, where they couldn't be extradited. As a result, the US government went after their companies, obtaining a guilty plea in 1984 and $200 million in settlement fees and fines.
Within the last few years, Russia has tried to make an example of energy barons it considers tax cheats. The most popular example: former Yukos oil boss Mikhail Khodorkovsky, once Russia's richest man. Arrested in 2003 on charges of fraud and tax evasion, he's now serving an eight-year sentence. But he could be in prison a lot longer; the government recently added money laundering charges to the counts against him. In 2005, the year Khodorkovsky was convicted, Forbes estimated his wealth to be $15 billion.
Khodorkovsky has always maintained that his arrest was politically motivated, and at least one oligarch seems to have learned from his example. Last year, Mikhail Gutseriev, former president of oil company Russneft, fled the country after being charged with tax evasion. His most recent estimated net worth: $2.6 billion.
Of course, some of the world's wealthiest people have long been accused of tax evasion but never found guilty, including Italian Prime Minister Silvio Berlusconi. Other convicted tax cheats, like tennis ace Boris Becker--who bilked the German government from revenue by claiming to live in the tax haven of Monaco--simply weren't wealthy enough to make our list.
But with governments taking a closer look at offshore tax havens, more billionaires could very well be added to the roster of wealthy tax cheats. Keep an eye on Europe.